The tribunal found that she had ceded control of her firm to non-admitted members of staff, and by doing so had acquiesced in the firm’s involvement in fraudulent conveyancing transactions, which at that time had already cost the solicitors’ compensation fund £2.9m.

She was found to have “turned a blind eye to the obvious risks of her actions”, but while these actions should a lack of integrity, contrary to principle 2 of the SRA principles, the tribunal said that “reasonable and honest people operating ordinary standards” would not find her dishonest.

The core of her appeal to the High Court was that the SDT applied only an objective test to its finding of integrity and did not consider her state of mind.

This would make it like the legal test for dishonesty in solicitors’ disciplinary proceedings: namely, the conduct in question must be found to be dishonest “by the standards of reasonable and honest people”; and the solicitor must have realised that by those standards his or her conduct was dishonest.

But Morris J considered the case law and said: “It is clear that, by contrast with the test of dishonesty, the test of ‘lack of integrity’ is an objective test alone. A distinction must be drawn between subjective knowledge of the facts of the underlying conduct (which are alleged to give rise to the lack of integrity), and subjective knowledge of the fact that the conduct would be regarded by reasonable people as lacking in integrity.

“There is no requirement that a solicitor must ‘subjectively’ realise that his conduct lacks integrity.”

As to what amounts to ‘lack of integrity’, he derived three principles from the case law:

No purpose is served by seeking to consider the meaning of the term at length – “lack of integrity is capable of being identified as present or not by an informed tribunal by reference to the facts of a particular case”; and

Lack of integrity and dishonesty are not synonymous. “A person may lack integrity even though not established as being dishonest. An example, might depending on the particular facts, be the position of a solicitor taking money out of a client account and from time to time making good any deficiency, when convenient.”

He quoted a definition previously approved by the Divisional Court that “a person lacks integrity if unable to appreciate the distinction between what is honest or dishonest by ordinary standards”.

Morris J said: “It is inherent in that analysis that that there is no requirement that the person himself must have an appreciation of the lack of integrity.”

However, he accepted Ms Newell-Austin’s submission that the person’s state of knowledge or intention in relation to the underlying conduct “is a relevant consideration in assessing whether, in carrying out such conduct, a person demonstrated a lack of integrity”.

Morris J said: “At one extreme, if the person is unaware of the relevant conduct, there can be no lack of integrity. At the other extreme, actual knowledge or recklessness in the sense of being aware that the conduct posed a risk and consciously taking it, will be highly likely to give rise to a finding of lack of integrity.

“However I accept the SRA’s submission that it is wrong to define lack of integrity as requiring recklessness. Lack of integrity does not necessarily involve risk taking.

“So, for example, the solicitor who dips into the client account with the intention of putting the money back lacks integrity because a client account is sacrosanct and regardless of the risk of the money not being repaid.”

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